Staff Report
City Council
Item No. 2.B
Meeting
Date:
April 8, 2026
From: Kevin Biersack, Financial Services Director
Title: AB 1600 Development Impact Fee (DIF) Annual Consumer Price Index (CPI) Update
RECOMMENDATION:
To review the annual inflationary update for the Assembly Bill (AB) 1600 Development Impact Fees.
BACKGROUND:
Development Impact Fees (DIFs) are established by the City Council. They are one-time fees charged to new development. DIFs are intended to pay for backbone infrastructure and capital facilities required to serve the new developments and new residents. Municipalities are prohibited from using DIFs to fund ongoing operations, maintenance, or to make up for existing service deficiencies. These fees must be accounted for, set aside, and saved until the municipality has the required funding to build the needed facilities.
On September 27, 2023, the City Council Adopted an updated Development Impact Fee Schedule to reflect the adopted recommendations based on the results of a comprehensive cost of service study. During interim years, i.e., between comprehensive studies, the City Council has authorized inflationary adjustments to fees. The September 2023 Fee Study update was implemented on January 1, 2024. On July 1, 2025, using the Construction Cost index (CCI) for the 20-City average as reported by Engineering News Record (ENR) for a twelve-month period/year or a similar published index, an inflationary adjustment was implemented.
This action represents a follow-on to the July 1, 2025 update This update will apply the authorized inflationary adjustments to the previously adopted AB 1600 Development Impact Fee Schedule. With City Council concurrence, a public hearing must be noticed and held, currently planned for April 22, 2026. Once approved by the City Council, this update will be used to implement the adjusted fees on July 1, 2026. This report presents the AB 1600 Development Impact Fees intended for use in Fiscal Year 2026/2027.
DISCUSSION:
The attached Fee Schedule is for these Development Impact Fees:
oParks
oTransportation
oGeneral Government Facilities
oFire Facilities
oPolice Facilities.
This 12-month inflationary adjustment in AB 1600 Development Impact Fees is 3.6% based on calendar year 2026 over 2025 using the 20-city average reported by the ENR CCI. The detailed computation is outlined in Appendix A.
FISCAL IMPACT:
With this annual 3.6% ENR CCI increase coupled with equivalent (FY 2024/2025) development activity in the upcoming FY 2026/2027, DIF revenues could provide an additional $75,000.
FIVE-YEAR STRATEGIC PLAN:
The implementation of updated Development Impact Fees supports the following strategic plan goals:
GOAL B: COMMUNITY INVESTMENT Objective: Cathedral City roads, gateways, public spaces, and other city infrastructure are well planned, designed, constructed, and maintained.
GOAL C: FISCAL STABILITY AND SUSTAINABILITY Objective: Cathedral City has economically prospered by facilitating the investment of private dollars in high-quality development which benefits the community. We remain financially solvent by implementing prudent fiscal policies and transparent financial practices.
ATTACHMENTS:
1. Proposed FY 2026_2027 Development Impact Fees CCI ENR Increase